The offices of the Chartered Insurance Institute (CII) sit unobtrusively in the heart of the City, blending in with many of the other austere buildings in this venerable part of the capital. Inside the premise continues, and the wood-panelled staircase running up the centre of the building owes more than just a nod to the cautious nature of the industry it represents, covered as it is with the world’s largest collection of old fire plaques. If another great fire ever swept through this part of town the CII can be safe in the knowledge that fire services from across the western world would be honour bound to protect its contents.
This is good news for the newly formed Society of Mortgage Professionals (SMP), which was set up by the CII and operates within its walls. The society is led by Richard Fox – the ex-compliance director of the Mortgage Code Compliance Board (MCCB) – who does not have time to be cautious as he strives to establish the SMP at a time when regulation and a slowing market are demanding the attention of advisers and lenders. This lack of caution is evident as he leads the way up the stairs, noting loudly – and for the record – that the impressive wood panelling is a sham, and dates back to the 1950s rather than the 1890s when the CII was formed.
However, Fox has been involved in financial services for too long, since leaving school at 18 to work for Midland Bank (now HSBC), to be daunted by being the new kid on the block. Indeed, after spending the last few years watching over the mortgage industry and debating statutory regulation with the Financial Services Authority (FSA), he admits he was even pondering whether to carry on working at all when the CII approached him. “What the CII is trying to do here with SMP is, in some ways, a continuation of some of the things we were doing at the MCCB, which was helping companies to improve their standards and do things better than they had in the past. And this was what attracted me to the role. I have had a very good career in financial services and have been lucky enough to have had access to a lot of skills and knowledge, and I want to make sure others have this opportunity.”
Up and running
Fox has hit the ground running with this new project and plans for new, specific qualifications have already been launched. The CII had been involved in the mortgage arena in the past, but before now has not had an internal focus on it. “It realised the mortgage market is much wider and that around 40% of companies specialise in mortgages and do not carry out full financial planning. The first thing to do with the SMP was to change the exams on offer, from a situation where the mortgage qualification was a top-up to the Financial Planning Certificate (FPC) qualifications to the situation we have now introduced where the mortgage exam is free-standing. So mortgage advisers do not need to take the old FPC2 and FPC3 exams. The basic Certificate in Financial Planning (CF1) is the paper on regulation and then CF6 is the one examining the knowledge specifically required by mortgage advisers,” says Fox.
As an examining organisation, the CII and SMP work closely with the Financial Services Skills Council, not only in making sure that the exams are properly accredited, but also in the use of designations. And in this time of increased professionalism and commoditisation the use of a recognised designation, which shows brokers are committed to the industry, could help make the difference between success and failure. But while Fox insists the SMP, as an integrated division of the CII, is here for the long term, numbers do matter. After all there is little use in a professional designation if no-one else has heard of it. Fox refuses to give away the exact number of companies that have joined lest he starts a bidding war with a competing examining body, but he divulges it is ahead of target, and it has already had positive feedback from some of the larger networks. “There are so many people in the industry, including lenders, who would like to be seen to be working with an organisation that is trying to improve the quality of the market as a whole, and I think that is very encouraging for the future.”
He says conversations with a number of the bigger players are helping to shape the SMP as they have told him they are becoming increasingly worried with the rate of staff turnover, particularly at junior level. If junior advisers have to answer questions about areas they are not fully conversant with it makes their working life difficult, and Fox concludes there is a need for a pre-adviser qualification. He says: “The CII already has an alliance with the City & Guilds, which gives it a huge ability to deliver courses at the lower level, and it also gives access to courses which may be useful on a higher level. I am also looking at suitable course material to help put together mortgage packages for ‘lifetime learning’.”
These conversations with networks have demonstrated how fluid the network and packager market is at the moment, and while Fox refuses to try and guess the winners and losers, he is adamant the SMP is ideally placed to help. One of the key issues for the industry is that business volumes are not as healthy as they used to be and, therefore, income streams are not as healthy either. A lot of companies are looking at their costs to make sure they are going to survive, but in the long run, proving professionalism and commitment to clients may be the key to survival, so offering help to acquire a professional designation may prove the difference. It may also help reduce costs for companies, as Fox admits he has already had conversations with professional indemnity (PI) insurers. “They seem very favourably disposed towards it, but we have not finalised a PI offering yet. When I can say there are now ‘x’ number of members they will be even more receptive to it.”
A valid offering
However, to reach his targets Fox understands he must have a valid offering, and he has to provide qualifications that brokers need. He has long been a critic of the FSA’s proposals on grandfathering, especially for lifetime mortgages, which say if a broker was competent under the old regime then they do not have to take the new qualification. And perhaps unsurprisingly, he is advocating that any broker wishing to sell lifetime mortgages demonstrates their competence by gaining a new qualification.
However mercenary this seems, Fox has been in the market far too long to think he can operate successfully out of pure self-interest, and is quite prepared to use his stature within the industry to stand up for intermediaries – even when he cannot gain materially from it. Late last year he received a lot of coverage in the specialist press for his criticism of the Financial Ombudsman Service (FOS), which had based its costs on dealing with an estimated 20,000 cases per year. “The thing with complaints is – and there are consumers out there with genuine complaints – they are publicised in such a way that people are almost encouraged to complain even when their experience is such they do not feel particularly aggrieved.
“There is a danger that publicity can inflate the number of complaints. How is it possible to equate 20,000 with the number the MCCB was getting through its arbitration service which was something like 200? In the MCCB we never made any attempt to stop people complaining. Admittedly, we did not have complaints against lenders going through the MCCB, but there is such a disparity it just could not be true.”
Part of the challenge for Fox is learning new tricks, and he admits he is still learning all the time too. While critical of the FOS and of the increased costs for brokers he is willing to admit he does not have all the answers to how the SMP develops in the future and says to a degree it will always be reactive rather than proactive, and down to the demands of advisers.
